Getting out of mortgage forbearance? Avoid foreclosure with these 5 tips

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The periods of abstention are drawing to an end. What are your options to help avoid foreclosure? (iStock)

The time to enroll in a mortgage forbearance program ends. President Joe Biden extended the foreclosure moratorium and forbearance mortgage registration window in February until June 30, 2021 for federally guaranteed mortgages, including loans guaranteed by Fannie Mae and Freddie Mac. But for many of those who signed up for the initial forbearance program at the start of the coronavirus pandemic, their final extensions for the 18-month period are coming to an end.

For many, options to support exit from forbearance went smoothly, and foreclosure debuts and inventories hit record highs in April, according to data from Black Knight. If you are experiencing financial difficulties but your forbearance period is ending soon, there are several options available to you to help you avoid mortgage foreclosure.

“We, the GSEs, as well as the various government agencies, be it the HUD, or the FHFA, and / or the CFPB to the extent that they were involved, we are all working together to try to find solutions together to protect homeowners, ”said Baron Silverstein, president of New Residential Investment Corp.

Visit Credible to speak with a home loan expert today about your options, including mortgage refinancing, to change the terms and rate on your home loan.

IS THE MORTGAGE REFINANCING BOOM OVER? WHAT TO CONSIDER NOW

For those coming out of mortgage forbearance, there is five options available to help get homeowners back on track while avoiding foreclosure. Currently, the Consumer Financial Protection Bureau (CFPB) has paused on all mortgage foreclosures through 2022, but homeowners who don’t prepare this year could have their mortgage foreclosed in the coming year.

In fact, Silverstein explained that the government continues to expand the options available to homeowners facing financial difficulties, including possible relief from payments or an extension to suspend payments.

“There will likely be other expansions, and there will definitely be other releases and resources available to the owner still facing these financial issues,” he said.

Here are five ways to get out of forbearance while minimizing your risk of foreclosure:

1. Refinance: Borrowers who refinance their mortgage can change the rate and conditions of their mortgage. In doing so, they would repay missed payments from their COVID-19 forbearance plan upon refinancing and start a new home loan on new terms. This could lower their mortgage rate, change loan terms, and lower a monthly payment. For loans guaranteed by Fannie Mae and Freddie Mac, there are more flexible mortgage refinancing options.

If you would like to see your refinancing options, visit Credible to compare rates from several lenders at once.

FHFA’S NEW MORTGAGE REFINANCING OPTION COULD REDUCE PAYMENTS PER HUNDREDS FOR SOME OWNERS

2. Reinstatement: Using this method, homeowners simply reimburse all of their missed payments. Once they paid off the missed loan payments, they would resume regular mortgage payments. While this option is simpler, it is not financially feasible for many homeowners.

3. Repayment plan: With a repayment plan, homeowners can pay an additional amount each month on top of their regular mortgage payment until the missed payments are repaid.

4. Modification of flexibility: If homeowners have been permanently financially impacted and will not be able to make their monthly payments, they may consider a loan modification plan. Similar to refinancing, the homeowner would add the missed payments to their principal balance and change the terms and mortgage rate of the entire loan. However, unlike refinancing, homeowners would stay with their current lender and simply change the terms of the loan, while demonstrating the financial need for this option.

To see if you are eligible for a modification, contact Credible to speak to a mortgage expert and get all of your questions answered.

5. COVID-19 payment deferral: Using this option would allow homeowners to simply start making their monthly mortgage payments as before the coronavirus pandemic, making the missed amount owed either on the loan maturity date or when the homeowner refinances.

HOW TO PREPARE FOR THE END OF MORTGAGE ABSENCE

There are several options available to homeowners when they exit forbearance plans to help them avoid foreclosure. For starters, Silverstein said, they just need to contact their mortgage lender or service agent to request a loan extension or modification.

“If a homeowner is having trouble paying their mortgage, they should contact us,” he said. “They just need to get in touch with us, I think that’s the most important thing. Our biggest problem with the consumers that we try to provide any kind of support or help is trying to. get in touch with them, and they have to contact us. “

Visit Credible to view your home loan options and see multiple lenders at once.

Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.



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